UB - External Factors Flashcards
5 political factors
- changing laws and legislation
- changing income tax rates
- changing VAT rates
- public spending on infrastructure
- changing corporation tax
Changing law and legislation
+ ‘zero waste Scotland’ and by complying companies get good PR
- increase minimum wage and increase expenses
Changing income tax rates
+ reduce income tax and give more disposable income
- increase income tax and give lower disposable income
Changing VAT rates
+ lower VAT lowers cost for products
- increase VAT increase selling price
Public spending of infrastructure
+ fund development of motorways, increases customer base for certain areas
+ public spending creates jobs so more disposable income
- only improves certain areas
Changing corporation tax
+ lower would increase profits
- increase would lower profits
Economic cycle stages
- boom
- recession
- recovery
Boom
- GDP, employment and demand for products high
= businesses can increase prices due to demand
= inflation occurs, need to rise wages
Recession
- GDP and employment levels fall
= redundancy payments and loss of skilled labour
= prices cut to increase demand
Recovery
- GDP and employment begins to rise
= increased sales due to increased disposable income
= new products and increase prices
Economic policy - fiscal policy and monetary policy
- fiscal is tax rates and level of public spending
- monetary is controlling supply of money - varying interest rates
Rise in interest rates - effects on borrowing and saving
- customers more likely to save
- customers less likely to borrow
Reduction in interest rates - effects on borrowing and saving
- customers less likely to save as interest rates bad
- customers more likely to borrow
Strong pound - effect on exports and imports
- exporters sell poorly as more expensive
- imports become cheaper, lower price
Weak pound - effect on exports and imports
- exporters can sell well as cheaper
- imports more expensive
UK’s ageing population
+ vast and growing market segment
+ lots of disposable income
- extensive market research necessary
More women with professional careers
+ better off when having children so bigger market for premium baby products
- maternity leave leads to recruiting and training costs
Evolving work-life balance
+ new market for 24/7 convenience
- wage costs
3 social factors
- UK’s ageing population
- more women with professional careers
- evolving work-life balance
3 technological factors
- cloud computing
- social media
- Wi-Fi
Cloud computing
+ Onedrive reduces IT hardware costs
- bad if internet connection down
Social media
+ raise brand awareness
- can spread bad reviews
Wi-Fi
+ Starbucks Wi-Fi gives competitive advantage
- high monthly costs
Environmental Factors
- weather
- recycling
Recycling
+ encouraging customers, ‘bags for life’ better reputation
- more money and effort to recycle
Weather
+ snow in winter helps skiing
- snow stops transport links and therefore production
Competitive factors
+ competition opening up next store provides passing trade
+ improves market by more choice and ideas
- undercut prices, lose customers or profits
- improved products forces R and D costs
